Agrium to mothball Nikiski facility

Blue Sky a no-go

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Agrium's Nikiski fertilizer plant shut down last year. The company has determined it will not be pursuing a coal gasification project.
Clarion file photo

Agrium's Nikiski fertilizer plant shut down last year. The company has determined it will not be pursuing a coal gasification project.

Clarion file photo

The last flicker of hope appears to have finally gone out for the Agrium plant in Nikiski on Thursday with the company's announcement that it will not go forward with a coal gasification project.

Agrium "has determined current economics are not sufficient to proceed with a gasification facility to supply coal-based syngas to our Kenai nitrogen facility," the company said from its Calgary, Alberta, Canada headquarters.

Company spokeswoman Lisa Parker said the 50 remaining Agrium employees at the plant will continue with mothballing the facility, which is expected to be complete sometime in June.

When asked if mothballing meant keeping the equipment warm for a possible restart at some future date, Parker said "mothball means shutdown" in this instance.

After repeatedly saying over the past few years the fertilizer plant would shut down due to its inability to secure long-term natural gas feedstocks, the Agrium plant did in fact stop production Sept. 28 last year. Its last product shipment went out Dec. 5.

As recently as the end of October, plant manager Chris Sonnichsen said, "We hope to hear by year end whether we're going to the next step on coal gasification," adding that approximately 20 employees, mostly engineers, will remain on site if the new project is going to continue.

For about 2 1/2 years, Agrium has been looking at the feasibility of gasifying coal from the Usibelli coal mine in Healy and possibly from across Cook Inlet at Beluga. If the gasification project, known as Blue Sky, came to fruition, as many as 2,000 direct and indirect jobs could have been created at Nikiski.

Parker said now that the decision has been made not to proceed with Blue Sky, the company is "evaluating the final disposition of the facility."

"We have some commitments to (Homer Electric Association) we will honor for the continued operation of the cogeneration plant," she said, adding Agrium supplies purchased natural gas to HEA.

Of the 100 Agrium employees laid off at the end of 2007, Parker said 50 have found jobs, "some on the North Slope, some here and some out of state."

Parker said she likes being part of the Kenai community.

"We're disappointed," she said. "We would have preferred to stay."

State Rep. Mike Chenault, whose office tried to assist Agrium through a grant and railroad bond financing, said, "The hope was they could make the (gasification) project pan out and still be a viable job center for the state. My office did all we could."

He said he would always hope the possibility of someone else coming forward to operate the plant exists.

"I think Agrium still has hopes, if a gas supply comes available, of reopening," Chenault said.

"I thought they tried their darnedest to put something together with other partners," he said. "It's too bad they couldn't."

Kenai Mayor Pat Porter said, "I'm very saddened," referring to the Agrium announcement Thursday. "I certainly hope something comes in the near future either from them or someone else.

"I hope someone will see the potential of that location and look at this community and say, 'This is a great place to do business,'" Porter said.

"I look forward to Kenai continuing to grow," she said.

Parker said once the plant is completely closed, Agrium will continue to have contract security guards at the plant "to ensure the safety of the facility and the safety of our neighbors."

Phil Hermanek can be reached at phillip.hermanek@peninsulaclarion.com.